Mendel University in Brno

Faculty of Regional Development and International Studies

The value addition to fresh oranges as a means of reducing post-harvest loses

and to improve the incomes of the orange farmers in Ghana

Bachelor's Thesis

Thesis author: Veronika Prokopová

Thesis supervisor: Ing. Samuel Antwi Darkwah Ph.D

Brno 2015

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Acknowledgement:

I would like to thank to my mother for her support and to my thesis supervisor Ing. Samuel

Antwi Darkwah Ph.D for his guidance during the process of writing this work and giving me the

opportunity to implement my research in Ghana.

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Declaration

I declare that I carried out this thesis:

Independently and only with the cited sources, literature and other professional sources.

I agree that my work will be published in accordance with Section 47b of Act No. 111/1998

Coll. on Higher Education as amended thereafter and in accordance with the Guidelines on

Publishing University Student Theses.

I understand that my work relates to the rights and obligations under the Act No. 121/2000 Coll.,

the Copyright Act, as amended, in particular the fact that Mendel University in Brno has the right

to conclude a license agreement on the use of this work as a school work pursuant to Section 60

paragraph 1 of the Copyright Act.

Before closing a license agreement on the use of my thesis with another person (subject) I

undertake to request for a written statement of the university that the license agreement in

question is not in conflict with the legitimate interests of the university, and undertake to pay any

contribution, if eligible, to the costs associated with the creation of the thesis, up to their actual

amount.

In Brno, 22.12.2015 ............................

Veronika Prokopová

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Abstract

V. Prokopová, The value addition to fresh oranges as a means of reducing post-harvest loses

and to improve the incomes of the orange farmers in Ghana, Brno, 2015.

The objective of the Bachelors thesis is to analyse value addition to fresh oranges as a means of

reducing post-harvest loses and to improve the incomes of the orange farmers in Ghana by

reducing waste of raw product and creating possible jobs for local people. The main work deals

with health, agriculture, social and educational development in selected areas that are mainly

engaged in farming and harvesting oranges. At the end of my thesis I will propose a simple value

addition processing for orange farmers and other small scale processor which they can sell to the

government for use in the school feed program.

Key Words

Agriculture development, Fruits, Ghana republic, Health Development, Orange harvesting,

Social development.

Abstrakt

V. Prokopová, Přidaná hodnota k čerstvým pomerančům jako ukazatel k rekdci po

sklizňových ztrát and zlepšení příjmů farmářů s pomeranči v Ghaně , Brno, 2015.

Tato Bakalářské práce analyzuje přidanou hodnotu čerstvých pomerančů ke snížení

posklizňových ztrát a k zlepšení příjmů místních farmářu v Ghaně. Hlavním bodem v práci je

vysvětlení důležitosti snížení plýtvání syrového produktu, vytváření pracovní pozice pro místní

obyvatele, zaměření na zdraví, zemědělství, sociální a vzdělávací rozvoj regionů, které jsou

orientovány na pěstování pomerančů. V poslední části je rozebrány hlavní kraje, které se

specializují na pěstování pomerančů a jejich zdravotní výhody, které pro lidské tělo vytváří.

Klí čové slova

Ghanská republika, Ovoce, Pěstování pomerančů Rozvoj zemědělství, Sociální rozvoj, Zdravotní

rozvoj,

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Table of contents

0. Introduction ......................................................................................................................................... 7

1. Aim of thesis ....................................................................................................................................... 8

2. Methodology ....................................................................................................................................... 9

2.1 Study Area ..................................................................................................................................... 9

2.2 Approaches to study ..................................................................................................................... 11

2.2.1 SWOT Analysis .................................................................................................................... 12

2.2.2 Logical Framework Approach ............................................................................................... 12

2.3 Target Groups .............................................................................................................................. 12

2.3.1 Orange farmers and Small business ....................................................................................... 12

2.3.2 Schools ................................................................................................................................. 12

3 Literature Review ............................................................................................................................... 13

3.1 Position of agriculture in Ghana’s current economy ..................................................................... 13

3.2 Assessing agricultural growth performance and potential at national level .................................... 14

3.3 Orange Production in Ghana ........................................................................................................ 14

3.4 Nutritional value and uses of oranges ........................................................................................... 16

3.5 Postharvest losses of Oranges ...................................................................................................... 17

3.6 Causes and mitigation of post-harvest losses ................................................................................ 17

3.7 Value Addition to harvested Oranges ........................................................................................... 19

3.7.1 Added value .......................................................................................................................... 19

3.7.2 Early Attempts to establish citrus juice industry in Ghana ...................................................... 20

4 Theoretical framework for establishing orange juice extraction - farmers and small scale business ...... 21

4.1 Process of orange juice extraction ................................................................................................ 21

4.2 Educating farmers for processing orange juice to mitigate post-harvest losses .............................. 22

4.2.1 Profile of Orange farmers in the study area ............................................................................ 22

4.2.2 Cost of engaging in juice extraction ....................................................................................... 23

4.3 Small scale business investment opportunity ................................................................................ 23

4.3.1 Net Investment ...................................................................................................................... 23

4.3 2 Loans and Interest ................................................................................................................. 24

4.3.4 Cash Flow ............................................................................................................................. 24

5 Discussions ........................................................................................................................................ 26

5.1 The Hazard Analysis and Critical Control Points (HACCP) ......................................................... 26

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5.2 Cooperation of farmers and Ghana’s school feeding programme .................................................. 27

5.3 SWOT analysis of orange juice extraction .................................................................................... 28

5.4 Value chain of orange juice production ........................................................................................ 28

5.5 Support for the small scale business ............................................................................................. 30

6. Recommendations ............................................................................................................................. 31

7. Conclusions ....................................................................................................................................... 32

References ............................................................................................................................................. 33

Internet sources ............................................................................................................................... 34

LIST OF ABBREVIATIONS ................................................................................................................ 39

LIST OF TABLES ................................................................................................................................ 40

LIST OF FIGURES ............................................................................................................................... 41

ANNEXES ............................................................................................................................................ 42

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0. Introduction

Ghana is a large domestic producer of fresh oranges. However, lack of knowledge and business

skills are holding local farmers back with using and processing oranges, that don't correspond

with their principles of trade. These oranges I am focusing on are usually with small noticeable

peel damage, colour difference or have fallen down from the tree.

Location wise, the research was done in Ashanti region; in Akrokerri and Obuasi areas due to

the area having the highest amount of oranges being harvested. Because of the simplicity of the

process, we are aiming to co-operate with “Ghana School Feeding Programme ".

The first part of the work analyses methodology, main objectives, approaches and target groups

the thesis is focused on.

The second part is dedicated to the literature review about current agricultural position to added

value of orange juice processing. This part focuses on the general topic such as development and

agriculture, production of oranges and post-harvest losses in Ghana. This part also introduces the

region, focusing on orange harvesting mainly and contribution to the socio-economic

development.

In third part the author of the thesis is focused on theoretical descriptions of an arrange juice

extraction and value addition by farmers and investment opportunity for small scale processing.

The last section is dedicated to analysing the economic implications of the thesis, such as costs,

value chain and general information about orange harvesting in Ghana supported by numbers

and figure. This part is also dedicated to budget and management of the research using such

methodical tools like SWOT analysis and the Logical Framework Approach.

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1. Aim of thesis The main objective of this thesis is to reduce wasting of fresh oranges that are not being sold

during the day at market or does not meet the quality demands of the buyers from companies

who are exporting oranges abroad. Since the process of creating the final product, which is fresh

orange juice, is not technically challenging and does not require special know-how, the

opportunities to the farmers who can use this suggestion is endless. The research will focus on

farmers in the area and give them basic information and lectures how to create the juice

themselves, without any extra costs.

Table 1: Main objectives, advantages and disadvantages

Main objectives Advantages Disadvantages

Stimulation for buying more

products Immediate feedback

Short- term duration

Increasing sales Contact with customers

Users are not faithful to the

final product

Stimulation for selling

products - try outs

Opportunity for constructive

criticism and overtures

Dependence on the weather

Supporting sales by special

offers for products - " Buy

one and get one free "

Strategic partnership with

government GSFP

Knowledge gap of local

farmers

Source: Author

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2. Methodology

2.1 Study Area

Ghana, a country on the West Coast of Africa, is one of the most thriving democracies on the

continent. It has often been referred to as an "island of peace" in one of the most chaotic regions

on earth. It shares boundaries with Togo to the East, la Cote d'Ivoire to the West, Burkina Faso to

the North. The South border line of Ghana is the Gulf of Guinea. A recent discovery of oil in the

Gulf of Guinea could make Ghana an important oil producer and exporter in the next few years.

The country's economy is dominated by agriculture, which employs about 40 % of the working

population. Ghana is one of the leading exporters of cocoa in the world. It is also a significant

exporter of commodities such as gold and lumber. The country covers an area of 238,500 square

kilometres. Ghana has an estimated population of 25,199,609 (July 2013 est.), drawn from more

than one hundred ethnic groups - each with its own unique language. English, however, is the

official language, a legacy of British colonial rule.

In 1957, Ghana (formerly known as the Gold Coast) became the first country in sub-Saharan

Africa to gain independence. After leading the country for nine years, the nation's founding

president, Kwame Nkrumah was overthrown in a coup d'etat in 1966. After Kwame Nkrumah,

Ghana was ruled by a series of military despots with intermittent experiments with democratic

rule, most of which were curtailed by military takeovers. The latest and most enduring

democratic experiment started in 1992 and it is what has gained recognition for Ghana as a

leading democracy in Africa.

Ghana has several tourist attractions such as the Cape Coast, Crocodile Pond at Paga and Mole

National Park. Most of the major international airlines fly into and from the international airport

in Accra (ghanaweb.com, 2014).

The area of concentration of research in this thesis is in Ashanti region. Ashanti Region is

currently the second most urbanized in the country, after Greater Accra (87.7%). the climate of

Ashanti region is basically tropical and lies almost entirely in forest zone. Environmental

problems identified in the region include deforestation, soil erosion, land degradation,

agrochemical, air and water pollution. By current estimates, the population of the region is

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approximately 3,130, 394 and the average density is 86 % per square km. The region is divided

into 21 traditional councils headed by traditional chiefs (Konadu-Agymang, Panford, 2008).

The Kumasi metropolis is the most populous district in the Ashanti Region. Agriculture is the

dominant sector in the region’s economic activities and it is endowed with abundant arable lands

which support the production of cash crops such as cocoa, citrus, coffee, oil palm, citrus cashew,

mango and food crops like cassava, plantain, rice, yam, cocoyam, maize, and vegetables

(GhanaWeb, 1994).

The recent discussions on Ghana’s successful agricultural growth have largely been based on the

sector's performance at the national level over the past five years. However, agricultural growth

during this period has been heavily influenced by favourable weather conditions and world

market price for cocoa, which is the country most important agricultural export product (Bresing

et al., 2008).

Agriculture employs the highest portion of country's economically active population (EAP) as

farmers, fishermen in farm labour and other agricultural-related activities such as marketing,

processing, etc. Although the proportion of EAP in agriculture has continued to decline over

several decades, it still exceeded 40 % in 1995. However, the incomes of those workers in the

agricultural sector as employees and self-employed are among the lowest in the country.

Through growth in agricultural production and increases in agricultural productivity have been

the main objectives of the agricultural policies of the past and present governments sustained

success has eluded policy - makers on both counts. There have been wide fluctuations in

agricultural growth which primary reflects fluctuations in the weather on which Ghana's

agriculture largely depends and also on the poor performance of the food crop and livestock

subsector, which constitutes about 60 % of agricultural output. (Aryeetey, Harrigan, Nissanke,

2000).

An important issue that arises is whether the agricultural sector has the capacity to adjust the

changing incentives of the economic reforms. It is argued that for farmers who are unable to

bargain successfully for exclusive rights, the land tenure system is viewed as an obstacle to

realizing individual aspirations and to agricultural productivity (Tettey, Puplampu, Berman,

2003).

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Average salary

Average net salary in Ghana is nearing to 873, 65 Ghana cedi per month. To US Dollar is around

238, 37 USD (indexmundi.com, 2015). We have to understand, that this salary is average and not

everyone are being paid that high at their job. With this information, it is important to point on

how much struggle it is for Ghanaian families to sustain their kids and themselves. By my

personal experience they do have to choose what they can afford and not, and mostly it is not

much. This mean they can't go to supermarket and buy juices and try to have balanced nutriment.

This is one of the many reasons, why Ghana struggles with so high children underweight and

these products are mainly bought by tourists or rich people.

2.2 Approaches to study

For completing this thesis, many methodological approaches were used. To obtain primary data,

it was necessary to execute an interview with respondents and their own experience with the

issues. Many important information and data were collected during author's visits and meetings

at University of Ghana in Accra-Legon and during interviews at local market places, collecting

the information about the issue from orange sellers. Significant amount of data was collected

during field trips in the Ashanti region. Since performing the process of creating the juice is very

simple and during the stay in Ghana, the idea approved itself for being quick and there is no need

to have any special technical education, nor professional equipment to create the final product.

In the theoretical part of the thesis, all the collected information from interviews and field

research are included, together with various Internet sources, supported with selected facts

extracted from literature. Secondary data was use to detail basic economic and territorial

information about the country and target group of this research.

Practical part of the thesis includes various sources for successful evaluation and marketing.

Capital budged in included in the first part of the practical part. Marketing strategies such as

SWOT analysis and Logical Framework Approach are included in the annex part of the thesis.

For evaluation of the thesis and profitability of the orange juice extraction for small scale

businesses, summary of loans and interests is used. Cash Flow is included in the Annex part of

the Thesis.

The discussion part includes all the obtained data and information and the author's suggestions

are included as well.

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2.2.1 SWOT Analysis

This is a tool that identifies the strengths, weaknesses, opportunities and threats of an

organization. Specifically, SWOT is a basic, straightforward model that assesses what an

organization can and cannot do as well as its potential opportunities and threats. The method of

SWOT analysis is to take the information from an environmental analysis and separate it into

internal (strengths and weaknesses) and external issues (opportunities and threats). Once this is

completed, SWOT analysis determines what may assist the firm in accomplishing its objectives,

and what obstacles must be overcome or minimized to achieve desired results (Investopedia.com,

2015).

2.2.2 Logical Framework Approach

As a methodology, the ‘Logical Framework Approach’ (LFA) is a systematic, visual approach to

designing, executing and assessing projects which encourages users to consider the relationships

between available resources, planned activities and desired changes or results.

At its core is a theory of change management, which presents the logical flow of causal

outcomes between achievement of a project/program’s activity targets, and the delivery of

intended results. Log frames, to this end, enable planners to establish a hierarchy of objective or

result statements – i.e. a development pathway – which articulate their best understanding of how

change can be achieved (betterevaluation.org, 2012)

2.3 Target Groups

2.3.1 Orange farmers and Small business

The work will focus on the orange farmers and their families. How they can add value to the left

over oranges that they could not sell at the market which will likely be thrown away as they are

deemed not “good” by buyers. Also the work will consider the possible small scale business

opportunity for orange juice making as small businesses are the lifeblood of any economy. In

economic terms, a small firm is one with relatively small market share. It is managed by its

owners and it is independent, in the sense that it does not form part of larger enterprise (Graham

Beaver, 2002).

2.3.2 Schools

The group of potential benefactors the research focuses on is students of primary schools. The

reason behind that is that they are still developing their body and immunity system. For the kids

from poor and not so wealthy families is important to support their health as much as possible.

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3 Literature Review

3.1 Position of agriculture in Ghana’s current economy Since independence agriculture has been a very important part of the Ghanaian economic

structure. While policy and political failure had caused per capita GDP growth declining until

1980s, the agricultural sector had been less affected than the non-agricultural sector because it

was less intervened by the government than the non-agricultural sector and its growth is

primarily led by smallholders for subsistence purpose of production.

Agriculture is about 40 % of GDP in the late 1990s and was still above 35 % until 2007. Only in

the recent two years of 2007 and 2008 share of agriculture falls to below 35 % at 34 % and 32 %,

respectively, in these two years. Recent decline in the agricultural GDP share is the result of

faster growth in the services, which has increased the share in GDP to 40 or more than 40 % in

2007 and 2008. Thus, it is first time in Ghana's history that agriculture is not more the largest

sector in the economy and the service sector has taken this position. On the other hand, share of

the industrial sector in GDP has not changed much after 1990s and share of the manufacturing

sector has even declined to less than 10 % of GDP in the recent ten years.

Agricultural structure and the regional distribution of agricultural GDP significantly differ across

Ghana’s agro-ecological zones. The Forest Zone remains the major agricultural producer,

accounting for 43 % of agricultural GDP, compared to about 10 % in the Coastal Zone, and 26.5

% and 20.5 % in the Southern and Northern Savannah Zones, respectively (Breisinger et al.

2008). The Northern Savannah zone is the main producer of cereals and livestock. More than 70

% of the country’s sorghum, millet, cowpeas, groundnuts, beef and soybeans come from the

Northern Zone, while the Forest Zone supplies a large share of higher-value products, such as

cocoa and livestock (mainly commercial poultry).

According to OECD (2015), the heterogeneous agricultural production structure also indicates

differences in the agricultural income structure across regions. The Forest Zone generates about

half its agricultural income from two of Ghana’s major export goods (cocoa and forestry).

Including non- traditional exports and fishery, export agriculture also plays an important role in

total agricultural income for the Coast and Southern Savannah Zones. In contrast, 90 % of

agricultural income in the Northern Zone comes from staple crops and livestock.

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3.2 Assessing agricultural growth performance and potential at national level

Agricultural transformation is characterized as a process of sustainably modernizing agriculture

and such a process is often measured by significant improvement in land and labour productivity,

greater market-orientation and diversified production diversification, as well increased domestic

and international competitiveness. To accelerate agricultural transformation it is first necessary

to understand the agricultural sector’s initial condition. While agricultural productivity growth

has started to pick up in the recent two decades, the main driving factor behind the rapid

agricultural growth is the crop subsector (excluding cocoa), the largest subsector in agriculture,

accounting for more than two-thirds of the agricultural economy. Staple crops such as maize,

sorghum, rice, cassava, yam, plantain, pulses, and oilseeds dominate this subsector. Some high

value crops such as vegetables and fruits are also included, but they play a relatively modest role

in overall agricultural growth given their small size (oecd.org, 2015).

3.3 Orange Production in Ghana

Major crops (See Annex 5) produced in Ghana are: Citrus, Palm Oil, Cocoa, Plantain, Maize,

Cassava, cocoyam, taro, etc. The Ministry of Food & Agriculture collaboration with Agricultural

Development and Value Chain Enhancement (ADAVANCE) -ACDI-VOCA (NGO), NBSSI,

and Obuasi Citrus Growers & Marketing Association claim about 63.75 % of citrus farms in the

Municipality have been measured and mapped. In 2012 total production of fresh oranges in

Ghana was 625.000.000 tons (See Figure 1 below). In total, Ghana is ranked on 18th place

worldwide with orange production and Ghana's total world share with this commodity is 0.9 %.

Figure 1: Tons of harvested oranges from 2000-2012. Source: factfish.com, 2012

Of this 70 % of the production was harvested from areas AKROKERRI and KWAPIA. These

areas are situated in Obuasi municipality (see Figure 2 below), which lies south of the regional

capital city, Kumasi. Obuasi has a settlement population of 175,043 people.

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Figure 2: political map of the Ashanti region showing Obuasi municipality

Most farmers around Akrokerri, Bobriase, and Kwapia, are well known in citrus production. The

name “Obuasi Ankaa woo”, is associated with oranges from these communities. About 70 % of

oranges produced in the district come from this area. Efforts are being made by the District

Directorate of Agriculture to bring the farmers together under one umbrella. The farmers could

source for funds to establish an orange processing plant, to produce fresh juice for sale. It is

envisaged that patronage will be very good, as the area is already known for its sweet and good

quality oranges. This will also go a long way in creating employment and reducing poverty

(ghanadistricts.com, 2006).

In a recent time section, Ghana farmers has been feeling pressure from the market side and the

government for the product delivery and have issues with harvesting product of 100% quality.

The low patronage and consumption of citrus fruits, particularly sweet orange, is compelling

many orange farmers in the Ashanti region to abandon the farming of the citrus fruits for other

cash rewarding crops.

Orange production is suitable for juice, jam and the extraction of essential oils from the peel. But

some orange farmers in the Ashanti region have expressed concern over the poor sales and lack

of market for oranges. They noted that market demand for oranges has been very low, and it does

not encourage some of them to continue with its production.

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They have therefore appealed to the government to assist them through the Ministry of Food and

Agriculture to secure markets for orange farmers in the Region. The main reason why the

farmers are willing to quit orange harvesting that it is cost and time consuming and in case of

difficulties such as bad weather condition, peel diseases they are not able to deliver them on time

to the buyers (modernghana.com, 2015).

There are some major challenges to orange production in Ghana. Disease and pest infestation

constituted 30.8% of the challenges, 29.6% had difficulty marketing of harvested produce whiles

15.6% of challenges were on high cost of production. Poor road network to farming communities

represented 14.2% and postharvest losses 9.8% (AKYEM-PEPRAH, 2012).

3.4 Nutritional value and uses of oranges

Orange is a very versatile product and by using the fruit, it doesn't mean the use of them ends.

Orange peel is known to have the following uses:

• Lower Blood Pressure: For thousands of years, Chinese medicine has used bitter orange

peels as a natural medicine. Some herbalists suggest eating orange peels as a way to

lower blood pressure naturally.

• Depression and Anxiety: The oil extracted from an orange peel can be used to help

naturally relieve anxiety and depression.

• Mosquito Repellent: The citrus smell of fresh orange peel will repel mosquitos. By high

level of mosquitos and malaria in Ghana this is very helpful and useful trick.

• Fish and Muesli seasoning.

• Medical help: Orange peel is not only rich for Vitamin C+ and can be used many

different ways. Very important in the peel are Bioflavonoids. This particular substance

human body cannot create and they are very important for function of blood pressure and

blood-vessels (thesproutingseed.com, 2013).

Oranges are also known to help prevent cancer: Oranges are rich in citrus limonoids, proven

to help fight a number of cancers including that of the skin, lung, breast, stomach and colon.

They help reduce risk of liver cancer: According to two studies in Japan eating mandarin

oranges reduces liver cancer. This may be due in part to vitamin A compounds known as

carotenoids.

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Oranges can prevent kidney diseases: Drinking orange juice regularly prevents kidney diseases

and reduces the risk of kidney stones. Drink juice in moderate amounts. The high sugar content

of fruit juices can cause tooth decay and the high acid content can wear away enamel if

consumed in excess.

Lower risk of disease: Oranges are full of vitamin C, which protects cells by neutralizing free

radicals. Free radicals cause chronic diseases, like cancer and heart disease.

They lower cholesterol: Since they’re full of soluble fiber, oranges are helpful in lowering

cholesterol.

Boosts Heart Health: Oranges are full of potassium; an electrolyte mineral is responsible for

helping the heart function well. When potassium levels get too low, you may develop an

abnormal heart rhythm, known as an arrhythmia.

Fights against Viral Infections: Studies show that the abundance of polyphenols in oranges

protects against viral infections.

Oranges relieves constipation: Oranges are full of dietary fiber, which stimulates digestive

juices and relieves constipation.

Helps create good vision: Oranges are rich in carotenoid compounds which are converted to

vitamin A and help prevent macular degeneration (care2.com, 2015).

3.5 Postharvest losses of Oranges

Citrus undergo some physiological disorders, which ultimately affects its quality during storage

and the period of marketing. These disorders are affected by pre-harvest and postharvest factors.

The major pre-harvest factors include nutrient deficiencies, sunburn and wind scars. Significant

among the postharvest factors include temperature, humidity, atmospheric gas composition and

mechanical stress.

Citrus fruits are susceptible to many diseases, which are caused by pathogens such as fungi,

bacteria, viruses, viroid, phytoplasmas, spiroplasmas and nematodes. The major postharvest

fungal diseases are green mold, blue mold, sour rot, grey mold, Alternaria rot and brown rot

(Akyem-Peprah, 2012).

3.6 Causes and mitigation of post-harvest losses

Post-harvest crop loss could be attributed to several causes including harvesting conditions;

biological and chemical causes; environmental causes, and socioeconomic factors.

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Harvesting methods employed (cutting knife, picking poles, etc.) may lead to heavy losses of

produce through blemishes and injury. Also, early or late harvesting which might be caused by

inadequate knowledge of period of maturity of produce may lead to post-harvest losses.

Produce is also sometimes harvested at a period where farmer believes he might get a high price

for goods which might lead to harvesting of over ripped or under ripped produce. Biological

causes are usually in the form of physiological deterioration and infection by diseases and pests.

For the former, these losses are caused by conditions that increase the rate of natural

deterioration occurring when fresh produce are exposed to extreme of temperatures, modified

atmospheres or contaminations which may cause rotting or failure to ripen. Infestation of

produce by pest who usually feed on produce may lead to a reduction in quantity or quality of

produce. The presence of microorganisms such as fungi and bacteria, which are widely

distributed in the air, soil and also on farm implements cause spoilage in produce which leads to

microbiological food losses.

Mechanical damage (physical injury) arises from careless handling of produce during both

harvesting and packing that causes injuries both internal and external to produce. Internal injuries

may lead to spoilage of produce since its physiology is compromised. External injuries such as

cuts and bruising may pave way for infections by pathogens and insects, which may lead to

diseases.

The environmental condition under which produce is stored has a major effect on the storability

as well as the quality of the produce. Temperature, relative humidity and moisture as well as

solar radiation are but a few of the environmental characteristics that affect post-harvest losses.

Reduction in high temperature for example, helps in increasing the shelf life of a produce since

the rate at which water is lost from produce reduces at low temperatures. Modification of

environmental conditions in which produce is stored helps to reduce post-harvest losses.

Transport losses are usually caused by unsuitable transport containers, poor or unsuitable roads

as well as lack of feeder roads, methods of loading and arrangement of produce in vehicle and

the virtual lack of appropriate storage facilities during transportation of produce to help keep

produce in almost its original state. Time of transporting produce can also cause loss quality of

produce. Provision of seasonal produce all year round can only be met when produce is well and

19

effectively stored. Storage does not prevent losses but reduces level of losses when the

appropriate technique is undertaken. However, high cost of using adequate storage devices deters

farmers from using them hence leading to high post-harvest losses. An increase in the length of

storage before consumption also could reduce quality of produce, which can eventually lead to

loss? Produce which have shorter shelf lives can be lost when storage time is increased.

Socioeconomic factors are considered secondary causes of loss as they encourage the primary

causes of loss. These are usually the result of inadequate or non-existent capital expenditures,

technology and quality control. Other miscellaneous causes of post-harvest losses include lack of

storage for highly perishable produce, lack of efficient communication between producers and

wholesalers, poor maintenance of transport, storage and handling facilities and over anticipation

of price increase leading to longer periods of storage and loss.

Mitigating measures against post-harvest loss are both precautionary and curative. Proper

packing, night movements of goods and use of cold storage are among major methods of post-

harvest activities undertaken. Early harvesting as well as careful packaging was part of recent

sensitization messages by extension officers. Both refrigeration and chemical methods are well

known. In general any effective mechanism that can minimize losses in both the short run and

long run should include the prompt harvesting of mature produce, selection of proper packaging

materials, and speedy movement of goods in good condition vehicles during periods of minimum

temperatures. Proper packaging, storage, good timing of produce movement, moderate to high

extent of drying, good timing of harvesting, good timing of processing are important (Egyir and

comp, 2011).

3.7 Value Addition to harvested Oranges

3.7.1 Added value

Added value is defined as the value added to the cost of raw materials and bought-out parts by

the process of production and distribution. To calculate it, the costs in bought-in items are

deducted from the turnover figure that appears in the profit of loss account to give a figure of the

value added by the efforts of the company's employees to make to best - most productive - use of

the capital and other resources available to them. In non-accounting terms, added value

represents the contribution made by employees to business success (Baron, Armstrong, 2007).

20

Examples of value added agricultural products include garlic braids, bagged salad mix, artisan

bread, lavender soaps and sausages. Adding value to agricultural products is a worthwhile

endeavour because of the higher returns that come with the investment, the opportunity to open

new markets and extend the producer’s marketing season as well as the ability to create new

recognition for the farm. Increasingly, value-added products are hitting the local market as

producers take advantage of high-demand product niches. This is the key to success in value

added agriculture—niche markets are where smaller producers can be most successful in creating

value and establishing a profitable business. Value added agriculture is not without its challenges

to farmers. One of the largest hurdles to overcome is that of food business and safety regulations.

For example, if you are interested in taking your organic blueberries and turning them into a high

quality jam that you can sell at the local farmers’ market, you must be a licensed commercial

kitchen in order to produce that product and sell to local consumers. You will also need to carry

liability insurance if you are selling at the farmers’ market to cover any sort of illness or other

food safety issues that may arise (Matthewson, 2007).

3.7.2 Early Attempts to establish citrus juice industry in Ghana

British Sailors developed Vitamin C deficiencies on long voyages and there was the need to find

cure for British soldiers who developed Vitamin C deficiencies on long voyages in the early part

of the 20th century. It was discovered at that time that by drinking lime juice, the disorder could

be cured. The Early Attempts to Establish Citrus Juice Industry in Ghana continued and the

British government made attempts to grow lime in its colonies to supply lime juice to the sailors.

This led to the introduction of the Mexican lime Citrus aurantifolia to Ghana specifically in the

Asebu area in the Central Region around 1900.

By 1928, lime production had reached its peak in the Central Region and as a result, the Emil El

Rose Citrus Factory was established at Asuansi to process lime juice for the sailors. Other citrus

varieties including sweet oranges, lemons, tangerines and grape fruits were introduced from

other parts of the world by the colonial government and established in a museum at Asuansi.

From the Asuansi museum, citrus particularly sweet oranges spread to other parts in Ghana

especially the cocoa growing areas where the soil and climatic conditions are conducive to the

growth of citrus. A solid foundation was laid for reestablishment of citrus juice industry with the

various citrus cultivars which made all year round production of citrus possible (Osei, 2013)

21

4 Theoretical framework for establishing orange juice extraction - farmers and small scale business

4.1 Process of orange juice extraction

The primary ingredient in orange juice is, of course, oranges. Oranges are members of the rue

family (Rutaceae), and citrus trees belong to the genus Citrus. Oranges, along with all citrus

fruits, are a special type of berry botanists refer to as a hesperidium. Popular types of oranges

include navel, Mandarin, and Valencia. A blend of different types of oranges is generally used to

provide a specific flavour and to ensure freedom from bitterness. Selection of oranges for juice is

made on the basis of a number of factors such as variety and maturity of the fruit.

The fruit contains a number of natural materials that contribute to the overall flavour and

consistency of the juice including water, sugars (primarily sucrose, fructose, and glucose),

organic acids (primarily citric, malic, and tartaric), and flavour compounds (including various

esters, alcohols, ketones, lactones, and hydrocarbons.)

Preservatives such as sulphur dioxide or sodium benzoate are allowed by federal regulation in

orange juice although the amounts are strictly controlled. Similarly, ascorbic acid, alpha

tocopherol, EDTA, BHA, or BHT are used as antioxidants. Sweeteners may be added in the form

of corn syrup, dextrose, honey, or even artificial sweeteners. More often, though, citric acid is

added to provide tartness.

Manufacturers may also fortify juices with extra vitamins or supplemental nutrients such as

vitamin C, and less commonly, vitamins A and E, and beta carotene. (Beta carotene is naturally

present in oranges, but only to a small degree.) There is some concern about the stability of these

added vitamins because they do not survive the heating process very well. Calcium in the form

of tricalcium phosphate is also frequently added to orange juice.

Oranges are harvested from large groves. Some citrus growers are members of cooperative

packing and marketing associations, while others are independent growers. When the mature

fruit is ready to pick, a crew of pickers is sent in to pull the fruit off the trees. The collected fruit

is sent to packing centres where it is boxed for sale as whole fruit, or sent to plants for juice

processing. The oranges are generally shipped via truck to juice extraction facilities, where they

are unloaded by a gravity feed onto a conveyor belt that transports the fruit to a storage bin.

22

Proper juice extraction is important to optimize the efficiency of the juice production process as

well as the quality of the finished drink. The latter is true because oranges have thick peels,

which contain bitter resins that must be carefully separated to avoid tainting the sweeter juice.

There are two automated extraction methods commonly used by the industry.

The first places the fruit between two metal cups with sharpened metal tubes at their base. The

upper cup descends and the fingers on each cup mesh to express the juice as the tubes cut holes

in the top and bottom of the fruit. The fruit solids are compressed into the bottom tube between

the two plugs of peel while the juice is forced out through perforations in the tube wall. At the

same time, a water spray washes away the oil from the peel. This oil is reclaimed for later use.

The second type of extraction has the oranges cut in half before the juice is removed. The fruits

are sliced as they pass by a stationary knife and the halves are then picked up by rubber suction

cups and moved against plastic serrated reamers.

The rotating reamers express the juice as the orange halves travel around the conveyor line.

Some of the peel oil may be removed prior to extraction by needles which prick the skin, thereby

releasing the oil which is washed away. Modern extraction equipment of this type can slice,

ream, and eject a peel in about 3 seconds (ghanafarmes.com, 2013). The quantity of oranges and

litre amount of juice that can be extracted is shown in Table 2 below.

Table 2: Quantity of oranges and amount of juice extracted.

Quantity of Oranges Finished product

15 medium sized oranges 1l

5 oranges = 1 kg 0,3 l (one glass)

1 ton of oranges 300l

Source: Author's research.

4.2 Educating farmers for processing orange juice to mitigate post-harvest losses

4.2.1 Profile of Orange farmers in the study area

Majority of the farmers met are men, around 70 % with their families. Most of them don’t have

formal educations but a few with basic education. Average age is 60 and above. Major household

income comes from the sale of citrus and other cash crops.

23

4.2.2 Cost of engaging in juice extraction

All needed is the start-up expenses to cover the basic equipment to fulfil the aim of research.

This includes containers in which the oranges juice will be transported from the farm or place of

work to the market or schools and juice maker to extract the juice from fruit.

A commercial manual juicer a can be used to extract the juice. Depending on the number in the

family, two to three of these juicers can be used. The estimated price of one juicer is $40. The

process of juice extraction is meant to be as simpler as possible, so the children in the school can

participate and process the juice by them. The estimated start cost for an orange farmer juice

extraction is about $150.

4.3 Small scale business investment opportunity

4.3.1 Net Investment

The amount spent by a company or economy on a capital assets, or gross investment, less

depreciation. Net investment helps give a sense of how much money a company is spending on

capital items (such as property, plants and equipment), which are used for operations.

Subtracting depreciation from this amount, or capital expenditure (since capital assets lose value

over their life because of wear and tear, obsolescence, etc.), provides a more accurate picture of

the investments' actual value. Capital assets include property, plants, technology, equipment and

any other assets that can improve the productive capacity of an enterprise (investopedia.com,

2015). The total amount of financial investment for start-up needed is 550 USD. Price for one

juice extractor is 125 USD and expected amount of processor to be needed is around 4, so the

process is more effective .Estimated price of buckets for carrying oranges is 5 USD, capacity of

one bucket is 14 litres. Expected amount of needed buckets is 10. For detailed overview of the

items prices, see Table 3 below.

Table 3: Start-up costs for small-scale processor.

Start-up costs USD $ Containers for carrying the

oranges (buckets) 50

Juice extractors 500 Total: 550

Source: Author

24

4.3 2 Loans and Interest

This part of business plans covers calculation how much financial need is required to cover all

the initial costs which is in total 550 USD. Loan is needed and according to Bank of Ghana,

actual interest rate for loans in 26%. Total payment makes 11052 USD and month payment is

172,7 USD. Expected loan maturity is 4 years.

Table 4: Initial cost

Initial costs 550 USD

Interest 26%

Total payment 693 USD

Month payments 14,43 USD Source: Author

Table 5: Loans

Year Repayment Interest Amortization Loan 1 14,43 73,40 20,10 107,93 2 14,43 43,20 33,16 90,79 3 14,43 65,70 58,1 137,53 4 14,43 68,10 10,65 0

Source: Author 4.3.4 Cash Flow

The difference between the available cash at the beginning of an accounting period and that at

the end of the period is the cash flow. Cash comes in from sales, loan proceeds, investments and

the sale of assets and goes out to pay for operating and direct expenses, principal debt service,

and the purchase of asset. Cash comes in from sales, loan proceeds, investments and the sale of

assets and goes out to pay for operating and direct expenses, principal debt service, and the

purchase of assets. A cash flow budget highlights the following figures:

• Revenues

• Financial capital requirements

• Operating expenses

The cash flow projections are based on the past performance of your business. To project cash

flow, start by breaking down projected sales over the next year according to the percentage of

business volume generated each month (entepreneur.com, 2015).

Ghanaian taxes are 0 % in the first 5 years for new businesses in agro- processing and if is the

company located outside the regional capitals, case of the model farmer, then there is no taxation

at all (PricewaterhouseCoopers, 2012).

25

4.3.4.1 Realistic variation of Cash Flow

Payback period shows, that juice processing will start paying it self-back after 2,03 years. It

means that after second quarter of the year, juice processing will start to be profitable.

Profitability index is 1,986. The rate of successful of the profit should be over 1, so this shows it

is in positive rates.

Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows

(both positive and negative) from a project or investment equal zero. In this case, IRR equals 83,

246%. Internal rate of return is used to evaluate the attractiveness of a project or investment. If

the IRR of a new project exceeds a company’s required rate of return, that project is desirable. If

IRR falls below the required rate of return, the project should be rejected (investinganswers.com,

2015). Break-even point is 3470 litres, which means, if we want to have Entrepreneurial

production, this is the amount of juices we need to sell. See table 6 for the numbers for realistic

Cash Flow version. Full Realistic variation of Cash Flow is listed in Annex part of work.

Table 6: Numbers for realistic variation of Cash Flow

Payback period 2,03 Profitability index 1,986

Internal rate of return 83,246% Net present value 16230 USD Break-even point 470

Source: Author

4.3.4.2 Pessimistic variation of Cash Flow

Payback period of the production starts at 3.45 years. Profitability index is 1120. Even though

the number is low, it is still profitable since it didn't cross level under 1. Internal rate of return is

32, 67%. Net present value is 7300 USD and Break-even point is 5124. Pessimistic version of

the juice production is therefor case, there is some unexpected problem with harvesting, for

example bad weather condition, loses of the crops, etc. For details of the pessimistic variation

please see Table 7. The full version is included in the Annex part of the work.

Table 7: Numbers for pessimistic variation of Cash Flow Payback period 3,45

Profitability index 1120 Internal rate of return 32,67%

Net present value 350 USD Break-even point 524

Source: Author

26

5 Discussions

5.1 The Hazard Analysis and Critical Control Points (HACCP)

The Hazard Analysis and Critical Control Points (HACCP) system is a logical, scientific

approach to controlling hazards in meat production. HACCP is a preventive system assuring the

safe production of food products. The application of HACCP is based on technical and scientific

principles that assure food safety. An ideal application would include all processes from the farm

to the table. The principle of HACCP can be applied to production, meat slaughter and

processing, shipping and distribution, food service and in home preparation.

HACCP is a systematic preventative system that uses common sense application of scientific

principles. The most important aspect of HACCP is that it is a preventative system rather than an

inspection system of controlling food safety hazards. Prevention of hazards cannot be

accomplished by end product inspection, so controlling the production process with HACCP

offers the best approach. The application of HACCP is systematic because structured hazard

analysis and implementation are provided. The process is common sense in that each processor

understands their operation and is best able to assess controlling the process. HACCP is also

science-based and so the controls that are placed in the process should be based on scientific

information.

The HACCP system has two major components:

• The HA of HACCP represents the logic in the hazard analysis which identifies the

where and how of hazards.

• The CCP of HACCP represents the critical control points that provide the control of

the process and the proof of the control. The end objective of HACCP is to make the

product as safe as possible and to be able to prove that the product was processed as

safe as possible.

This does not mean that HACCP provides 100% assurance of food safety to consumers, but does

mean that a meat processing companies doing the best job possible for safe food production.

27

The assurance of safety comes from the process of identifying the hazards, establishing controls

for the identified hazards, monitoring the controls and periodically verifying that the system

works (foodsafety.unl.edu, 2013).

To keep the juice bacteria free, keep the juice fresh for another few days, healthy alternative of

preserving the juice is adding a fresh lemon juice. It will also increase the level of vitamin C.

5.2 Cooperation of farmers and Ghana’s school feeding programme

The government's Ghana School Feeding Programme (GSFP) was piloted in 10 schools in late

2005, and since then has progressively grown to serve over 1.6 million children in 4,000 public

schools across all 170 districts in Ghana. As a strategy to increase domestic food production,

household incomes and food security in deprived communities, the GSFP has become a very

popular programme with the Ghanaian public, and enjoys solid commitment from the

government.

The programme as a whole is highly valued by the Ghanaian public, its high profile has meant

sensitisation of the benefits of school feeding have reached many isolated communities (hgsf-

global.org, 2010).

School feeding programmes that are used as safety nets or for social protection purposes tend to

be multi-sectorial in nature in both practice and impact. In Ghana, the Agriculture, Health and

Education sectors are actively involved in the GSFP implementation in accordance with the

programme design. Hence, national activities and statistics from these sectors are relevant and

serve as baseline information for monitoring the GSFP implementation process and also the

impact of the programme as a development strategy (hgsf-global.org, 2010).

The role of GSFP in this project is important. The main idea is that this research results will be

submitted to them. With this abstract, they will select school in the examined area and implement

the project and final product there. The main indicator which school will be selected is of course

poverty ratio and number of students with health and social issues.

28

5.3 SWOT analysis of orange juice extraction

The table listed below specifies the details of SWOT analysis for added value of harvested oranges.

Table 8: SWOT analysis

Strengths Weaknesses

Easy availability of material

Quick and easy manufacturing procedure

High quality of final product

Dependence on the weather and crop

yield

Knowledge gap of local farmers

Lack of finances

Opportunities Threats

Strategic partnership with government GSFP

Health benefits

Additional income for farmers

Employment creation

Global warming

Possibility of government not adding

orange juice on the menu of GSFP

Source: Author

5.4 Value chain of orange juice production

A value chain is the whole series of activities that create and build value at every step. The total

value delivered by the company is the sum total of the value built up all throughout the company.

Michael Porter developed this concept in his 1980 book 'Competitive Advantage'.

The significance of the value chain: The value chain concept separates useful activities (which

allow the company as a whole to gain competitive advantage) from the wasteful activities (which

hinder the company from getting a lead in the market). Focusing on the value-creating activities

could give the company many advantages. For example, the ability to charge higher prices; lower

cost of manufacture; better brand image, faster response to threats or opportunities.

Porter defines the value chain as made of primary activities and support activities. Primary

involves inbound logistics (getting the material in for adding value by processing it), operations

(which are all the processes within the manufacturing), outbound (which involves distribution to

the points of sale), marketing and sales (which go sell it, brand it and promote it) and service

(which maintains the functionality of the product, post sales).

29

The support functions which feed into all the primary functions are the firm infrastructure, like

MIS which allows managers to monitor the environment well; Human Resource, which develops

the skills needed to steer the company well; procurement to buy/ source goods at the right price,

which increasingly takes importance because of difficult economic conditions and technology,

which could give the firm speed, accuracy and quality.

Both these allow the firm to charge a margin, which partly comes from the value addition of the

primary and support functions and partly from the advantage that the company gains due to

communication of the value addition to the consumer (brand image, faith, trust and so on)

(economictimes.indiantimes.com, 2015).

The initial state is, that leaders and TOP management decides what school they do want to

support with their programs. They do accept project that is being created, but have their own

right to choose who will be supported. This cooperation leads to supporting school, that need

help the most and project will be the most effective.

The development is also counting from support with of women and mothers from villages and

school staff to prepare the fresh juice, since there is no income from this project. The Figures 3

and 4 below are showing detailed value chain for small-scale orange juice extraction business

and for farmers.

Figure 3: Value chain for small-scale orange juice extraction businesses. Source: Author

Producers

Small scale industry

Distributors

Market women , small businesses, small groceries

shops GSFP, general public

30

Figure 4.: Value chain for farmers of orange juice for extraction businesses. Source: Author

5.5 Support for the small scale business

Also with this thesis can be shown and taught how easy it is to make fresh orange juice and that

they actually can make other fresh juices or other fresh supplements.

What steps should improve the research:

• Make a lecture for parents and students about nutrition

• Make a lecture for parents and students about oranges and their health benefits

• Flyers about raw oranges and orange peel

Implementation of project can't be done without personal support. By this mean, it is very

important to get a volunteer support. I would like to solve this problem by creating a position for

volunteers on web idealist.org. This could provide us cheap personal support from people, who

want to help and are interesting into the project.

Other option is to co-operate with university with focus on territorial studies and international

relations like Mendel University, Faculty of regional development and International Studies.

Because I had a chance to experience Ghana by absolving SID program, co-operate in similar

case and provide students who will volunteer on this project and make a case study based on it.

Farmers

Final Customer

(school

students, etc.)

31

6. Recommendations

It is important, to keep recommendations on a level that is realistic and performable even for

Ghana government, supporting organizations and local people who are connected to the project

or do live in the area where the project is being held. Stable agricultural policy with regularly

changed weather is the key to success of the project and continuous functioning of supplying to

the schools.

Supporting domestic trade and create better opportunities for local farmers to have their products

sold at supermarket and not to import harvest from abroad countries if Ghana is able to grow the

same product for a cheaper price.

Raise awareness for local farmers about creating product with added value so there is no more

waste of a raw and vitamin rich product. One of the main issues is to deal with the lack of know-

how and ideas how to effectively use up the whole crop without waste. If the orange is not

suitable for selling by peel damage or wrong shape, it is important to spread the information that

letting the crop rot isn't the right way to go and the item is still profitable.

Creating workshops and lectures sheet about health benefits of oranges, different uses and

medical benefits is very important things. Local people in more socially poor districts might not

be used to see orange juice being sold at school. It is very important to show them and teach

them what this final product can give to their kids and how important it is to support their

immune system. If the project is successful it is not impossible for the parents and all the village

people to take over the idea.

In Ghana in this area it is normal for local people to have orange tree in their back yard. They

can provide healthy, vitamin rich juice for their kids and whole family. Even the peel of the

oranges can be used as a natural defense against mosquitos and since Ghana is country with

Malaria disease, it can only help and have a positive impact on health and socio-economic status

of the county.

32

7. Conclusions

The main aim of this thesis to analyze the possibility of adding value to fresh oranges in Ghana

and to examine what the possible repercussions for socio-economic development in the selected

is. In this thesis, the research is focused on the Ashanti region, to be more exact areas of

Akrokerri and Obuasi. For the examination primary and secondary data were used.

Theoretical part of Bachelor's thesis is focusing on position and development of agriculture in

Ghana and its current position. Also, overview with basic information about the country, together

with the main objectives about Ghana School system can't be missed.

To analyze the economical part many methodological tools were used such as: break-even point,

cash flow, net investment, profitability index, and internal rate of return and payback period.

The internal rate of return is 1,986, which shows, that the production of fresh orange juice is

returnable and the investments won’t be lost. All of these results that business plan includes

should be implemented in realization of the production.

With production of fresh juice, this is going to bring constant income and can be implemented

into many different situations and areas. Since Ghanaian agriculture is stable, arises and climatic

conditions are more than positive for creating a product from very common commodity in

Ashanti region is not a hazard. Information about added value, process of creating fresh juice and

overall use of oranges and alternative use is included.

Due to the development of small-scale business, Ghanaian government is open for supporting

these kinds of projects' and many can be found on the territory of Ghana republic.

The marketing part of Bachelor's thesis is focusing on SWOT analyses, Logical Framework

approach and Risk chart. The annex part of the work includes Logical Framework and Risk chart

for detailed overview. One of the main threats for the juice production can be unpredictable

change of weather condition, so that the crops will not be suitable for ingestion. Strong part of

the production is its simple procedure, that is not time challenging and no special or previous

skill are needed.

33

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39

LIST OF ABBREVIATIONS

BHA Butylated hydroxyanisole

BHT Butylated hydroxytoluene

EAP Economicaly Active Population

EDTA Ethylenediaminetetraacetic acid

GSFP Ghana School Feeding Programme

GHC Ghana Cedi

HACCP The Hazard Analysis and Critical Control Points

IRR Internal Rate of Return

LFA Logical Framework Approach

MIS Management Informational System

PSC Programme Steering Commitee

PTA Point of Total Assumption

SLE School Life Expectancy

40

LIST OF TABLES

Table 1.: Main objectives, advantages and disadvantages....................................................page 8

Table 2.: Quantity of oranges and amount of juice extracted...............................................page 23

Table 3.: Start-up costs for small-scale processor................................................................page 24

Table 4.: Initial cost ..............................................................................................................page 25

Table 5.: Loans .....................................................................................................................page 25

Table 6.: Numbers for realistic variation of Cash Flow .......................................................page 26

Table 7.: Numbers for pessimistic variation of Cash Flow ..................................................page 27 Table 8.: SWOT analysis ......................................................................................................page 30

41

LIST OF FIGURES

Figure 1.: Political map of Ashanti region ...................................................................... page 14

Figure 2.: Tons of harvested oranges ............................................................................... page 15

Figure 3.: Value chain for small-scale orange juice extraction businesses .......................page 31

Figure 4. Value chain for farmers of orange juice for extraction businesses.................... page 31

42

ANNEXES Annex 1. Logical Framework Analysis

Source: Author

Invention logic Objectively verifable indocators of achievmet

Sources of means and verifications

Assumptions

Overall objective

Make contribution of school in the Obuasi area that are

supplied by fresh orange juice.

Increase level of not underweight kids, spread the information about benefits of

oranges. Periodic auditing.

Specific objectives

Provide healthy dietary supplement

Increse level of non- unerweight kids, improve health, creating job offers for

local people Periodiac reports

Job opportunity, increasing know-how and health for local school students and

teachers

Transfer know-how about

nutrition. Increse level of non- unerweight kids,

improve health

Periodic lectures about health and teaching about

nutrition

Theoretical knowledge about subject of lectures,

know-how

Improve sales of oranges and

lower their wasting Bring informations about oranges and their benefits to families of students

Periodical lectures, educational flyers and board,

spreading inforations

Willingnes of people to learn and co-operate

with the project

Transfer know - how for

auditing system Establishing auditng system

Transfering know-how into practical life

Transfering know-how, external expert for the

concept, supervising and leading the project

Expected results Involving women in economic

activites Establishing cooperative Legal establishment

Interest in cooperation.Knowledge of cooperatives of using

the auditing and accounting system.

Lowering waste of oranges Establishing cooperative between local

farmers and us, legal contract Legal establishment

Money for establishment, spreading know- how and educate local families and their

kids at school

Creating auditing system Increase awerness of production Periodiac reports Existence of externist expert for transfering

and making know-how

43

Annex 2. Risks

Source: Author

Type of risk Probability of risk Severity of risk Impact of risk Ellimination of risk

Technique

Wrong preparation of

the project documentation

average great Project disapproval Time managment, consultations

with project mentor

Wrongly selected

territory of the project

great great

Wrong land, field research and

comunication with sellers on market

Field research, move to another location

Failure of time managment

medium medium Problems with orange

supplies Co-operate with big farm

Natural disaster

great great crop failure Find a replacement crop

Finance

Unexpected increase of

cost medium great

Impossibility in completing project

Financial reserves

Operational

Unreability of workers

great great Impossibility in

completing project, make the product

Have backup workers and volunteers

Lack of product

because of school

congestion

great great Every student won't be able to get fresh orange

juice Have backup oranges

Volunetter shortage

medium medium insufficient amount of staff, time managment

failiure Hire local university students

44

Annex 3. Realistic variation of Cash Flow

In USD Year 1.

Year 2.

Year 3.

Year 4.

Year 5.

Year 6.

Year 7.

Year 8.

Year 9.

Year 10.

Utilized capacity 20% 30% 45% 70% 45% 30% 20% 45% 30% 70%

Revenues 685 800 534 780 5134 800 686 5134 800 780

Total costs 535 750 878 570 678 750 535 878 650 570

Depreciation 850 850 850 600 600 0 0 0 0 0

Profit before interest and taxes

870 1000 370 980 400 1000 370 400 1000 600

Interest 131 127 1100 765 0 0 0 0 0 0

Profit before taxes -240 469 780 760 400 130 870 400 300 600

Tax 0 0 0 0 0 0 0 0 0 0

Profit after taxes -240 469 800 790 400 300 870 400 130 360

Net cash flow (NCF) -150 613 670 599 400 130 870 300 100 360

Cumulative cash flow -150 968 850 660 204 168 890 150 189 350

Source:Author

Payback period 2,03 Profitability index 1,986

Internal rate of return 83,246% Net present value 16230 USD Break-even point 470

45

Annex 4.: Pessimistic variation of Cash Flow

In USD Year 1.

Year 2.

Year 3.

Year 4.

Year 5.

Year 6.

Year 7.

Year 8.

Year 9.

Year 10.

Utilized capacity 20% 30% 45% 70% 45% 30% 20% 45% 30% 70%

Revenues 185 200 334 670 334 200 186 334 200 670

Total costs 535 650 678 370 278 650 535 678 650 370

Depreciation 350 350 380 600 600 0 0 0 0 0

Profit before interest and taxes

80 300 400 980 400 300 870 400 300 600

Interest 1015 1070 1000 765 0 0 0 0 0 0

Profit before taxes -340 569 800 690 400 100 800 400 300 600

Tax 0 0 0 0 0 0 0 0 0 0

Profit after taxes -340 469 800 690 400 300 870 400 1000 600

Net cash flow (NCF) -150 613 570 599 300 100 870 300 100 360

Cumulative cash flow -150 268 550 460 134 158 890 150 169 380

Payback period 3,45 Profitability index 1120

Internal rate of return 32,67% Net present value 350 USD Break-even point 524

Source: Author

46

Annex 5. Overview of land use

Source: FAO Corporate Document Repository, 2004